SEC Filing | Destination XL Group, Inc.

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 29, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 01-34219

DESTINATION XL GROUP, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware	04-2623104
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
555 Turnpike Street Canton, MA	02021
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (781) 828-9300

Securities registered pursuant to Section 12(b) of the Act.


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	DXLG	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 12, 2023, the registrant had 62,895,439 shares of common stock, $0.01 par value per share, outstanding.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

DESTINATION XL GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)


	April 29, 2023			January 28, 2023
	(Fiscal 2023)			(Fiscal 2022)

ASSETS
Current assets:
Cash and cash equivalents	$	29,933		$	52,074
Short-term investments		16,064			—
Accounts receivable		1,186			1,720
Inventories		100,258			93,004
Prepaid expenses and other current assets		7,709			7,214
Total current assets		155,150			154,012

Non-current assets:
Property and equipment, net of accumulated depreciation and amortization		35,766			39,062
Operating lease right-of-use assets		125,981			124,356
Deferred income taxes, net of valuation allowance		29,072			31,455
Intangible assets		1,150			1,150
Other assets		549			563
Total assets	$	347,668		$	350,598

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	25,879		$	27,548
Accrued expenses and other current liabilities		27,074			36,875
Operating leases, current		37,071			37,329
Total current liabilities		90,024			101,752

Long-term liabilities:
Operating leases, non-current		106,845			106,912
Other long-term liabilities		5,127			4,706
Total long-term liabilities		111,972			111,618

Commitments and contingencies

Stockholders' equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, none issued		—			—
Common stock, $0.01 par value, 125,000,000 shares authorized, 78,495,557 and 78,229,861 shares issued at April 29, 2023 and January 28, 2023, respectively		785			782
Additional paid-in capital		322,941			321,516
Treasury stock at cost, 15,625,172 shares at April 29, 2023 and January 28, 2023, respectively		(105,386	)		(105,386	)
Accumulated deficit		(67,789	)		(74,756	)
Accumulated other comprehensive loss		(4,879	)		(4,928	)
Total stockholders' equity		145,672			137,228
Total liabilities and stockholders' equity	$	347,668		$	350,598

The accompanying notes are an integral part of the consolidated financial statements.

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


	For the Three Months Ended
	April 29, 2023		April 30, 2022
	(Fiscal 2023)		(Fiscal 2022)

Sales	$	125,442	$	127,655
Cost of goods sold including occupancy costs		64,526		63,788
Gross profit		60,916		63,867

Expenses:
Selling, general and administrative		48,281		46,597
Impairment (gain) of assets		—		(351	)
Depreciation and amortization		3,477		3,987
Total expenses		51,758		50,233

Operating income		9,158		13,634

Interest income (expense), net		339		(143	)

Income before provision for income taxes		9,497		13,491
Provision for income taxes		2,530		103


Net income	$	6,967	$	13,388


Net income per share - basic	$	0.11	$	0.21
Net income per share - diluted	$	0.11	$	0.20

Weighted-average number of common shares outstanding:
Basic		62,690		64,080
Diluted		66,316		68,370

The accompanying notes are an integral part of the consolidated financial statements.

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	For the Three Months Ended
	April 29, 2023			April 30, 2022
	(Fiscal 2023)			(Fiscal 2022)
Net income	$	6,967		$	13,388

Other comprehensive income before taxes:
Foreign currency translation		—			(4	)
Pension plans		66			67
Other comprehensive income before taxes		66			63
Tax provision related to items of other comprehensive income		(17	)		—
Other comprehensive income, net of tax		49			63
Comprehensive income	$	7,016		$	13,451

The accompanying notes are an integral part of the consolidated financial statements.

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


																			Accumulated
							Additional												Other
	Common Stock						Paid-in			Treasury Stock						Accumulated			Comprehensive
	Shares			Amounts			Capital			Shares			Amounts			Deficit			Loss			Total
Balance at January 28, 2023		78,230		$	782		$	321,516			(15,625	)	$	(105,386	)	$	(74,756	)	$	(4,928	)	$	137,228
Board of directors' compensation		15			—			108			—			—			—			—			108
Stock compensation expense		—			—			404			—			—			—			—			404
Restricted stock units (RSUs) granted for achievement of performance-based compensation, reclassified from liability to equity		—			—			1,146			—			—			—			—			1,146
Issuance of common stock, upon RSUs release		251			3			(3	)		—			—			—			—			—
Shares withheld for taxes related to net share settlement		(81	)		(1	)		(445	)		—			—			—			—			(446	)
Exercise of stock options		81			1			215			—			—			—			—			216
Other comprehensive income		—			—			—			—			—			—			49			49
Net income		—			—			—			—			—			6,967			—			6,967
Balance at April 29, 2023		78,496		$	785		$	322,941			(15,625	)	$	(105,386	)	$	(67,789	)	$	(4,879	)	$	145,672

The accompanying notes are an integral part of the consolidated financial statements.

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)



																			Accumulated
							Additional												Other
	Common Stock						Paid-in			Treasury Stock						Accumulated			Comprehensive
	Shares			Amounts			Capital			Shares			Amounts			Deficit			Loss			Total
Balance at January 29, 2022		77,025		$	770		$	319,511			(12,755	)	$	(92,658	)	$	(163,879	)	$	(5,525	)	$	58,219
Board of directors' compensation		29			—			125			—			—			—			—			125
Stock compensation expense		—			—			366			—			—			—			—			366
RSUs granted for achievement of performance-based compensation, reclassified from liability to equity		—			—			1,138			—			—			—			—			1,138
Issuance of common stock, upon RSUs release		313			3			(3	)		—			—			—			—			—
Shares withheld for taxes related to net share settlement		(85	)		(1	)		(414	)		—			—			—			—			(415	)
Exercise of stock options		41			1			22			—			—			—			—			23
Repurchase of common stock		—			—			—			(946	)		(4,847	)		—			—			(4,847	)
Other comprehensive income (loss):
Pension plan, net of taxes		—			—			—			—			—			—			67			67
Foreign currency, net of taxes		—			—			—			—			—			—			(4	)		(4	)
Net income		—			—			—			—			—			13,388			—			13,388
Balance at April 30, 2022		77,323		$	773		$	320,745			(13,702	)	$	(97,505	)	$	(150,491	)	$	(5,462	)	$	68,060

The accompanying notes are an integral part of the consolidated financial statements.

DESTINATION XL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



	April 29, 2023			April 30, 2022
	(Fiscal 2023)			(Fiscal 2022)
Cash flows from operating activities:
Net income	$	6,967		$	13,388
Adjustments to reconcile net income to net cash used for by operating activities:
Amortization of deferred debt issuance costs		19			19
Impairment (gain) of assets		—			(351	)
Gain from the sale of equipment		(96	)		—
Depreciation and amortization		3,477			3,987
Deferred taxes, net of valuation allowance		2,383			—
Stock compensation expense		404			366
Board of directors' stock compensation		108			125

Changes in operating assets and liabilities:
Accounts receivable		534			938
Inventories		(7,254	)		(15,104	)
Prepaid expenses and other current assets		(495	)		(1,462	)
Other assets		(5	)		(20	)
Accounts payable		(1,669	)		4,248
Operating leases, net		(1,950	)		(1,874	)
Accrued expenses and other liabilities		(6,657	)		(5,803	)
Net cash used for operating activities		(4,234	)		(1,543	)

Cash flows from investing activities: